The next three years

Helen Clark has given some idea of her agenda over the next three years in an address to the CTU conference yesterday:

This term will be about smart policy and strategies for growth, innovation, and productivity in the economy, and for quality and best practice in our social policy and services.

It will be about sustainable development and meeting the big challenges in energy and transport.

It will be about enhancing the reputation of our small country as an independent, principled, and engaged member of the international community.

It will be about the development of our national identity as a unique nation; as a tolerant and inclusive nation able to accommodate diverse peoples and beliefs and proud of its heritage; as a creative nation which celebrates those who express what’s special about us through music, dance, theatre, literature, film, and design; and as a nation which takes pride in all its successes across many fields.

So, the focus is going to be on economic (rather than social) policy. Labour wants to shift us towards being a high-skill, high-wage economy, rather than National's vision of a low-skill, low-wage one. In order to do this, it needs to encourage productivity growth - but by getting people to work smarter rather than harder. This is more difficult than it seems; we have an entrenched "low-cost" business culture, which sees productivity improvements as coming from wage cuts and more warm bodies rather than investing in their business, and this will take a while to change. On the plus side, much of the groundwork has already been done. The recent tax changes to depreciation rates will encourage capital investment and upgrades, and the labour shortage, ERA and union activism all raise the cost of labour relative to capital and thereby encourage investment over hiring more people (assuming they can be found). Increasing the minimum wage will strengthen this trend even further. Together, these policies send a clear economic signal to business encouraging them to move in the right direction - and another three years of Labour should give that signal time to get through.

As for the other parts, I'm pleased to see energy and transport getting a mention. These were priorities for the Greens, and Labour has stolen many of their best ideas in these areas. Hopefully they'll be able to implement them. I am however wondering how having Winston Peters as our Minister of Foreign Affairs will enhance our international reputation, or how Labour will be able to encourage tolerance and diversity while having to depend on the regressive bigots in NZ First for confidence and supply...